Apple Lends Globalstar $252m To Aid Satellite-Connected iPhones

Apple is lending a financial hand to its satellite partner Globalstar, which is delivering emergency services communications for iPhone users when they are outside cellular coverage.

The emergency feature was first revealed to the world in September 2022, when Apple launched its iPhone 14 handsets.

The agreement with GlobalStar at the time allowed iPhone 14 handsets to connect with emergency services when cellular and Wi-Fi coverage are not available.

Apple loan

The service sends an emergency SOS message via satellite, and previously people would have required a sat-phone to do the same.

Apple officially launched its emergency SOS connectivity capability for iPhone 14 users in the United States and Canada in November last year, and it typically connects to one of Globalstar’s existing 24 satellites in LEO for emergency services outside cellular coverage.

The service was extended to the United Kingdom, France, Germany, and Ireland in December.

Now in a regulatory filing with the US SEC, Globalstar on 28 February revealed that Apple is lending it $252 million in what it calls a “prepayment”, to help cover upfront costs for replenishing its low Earth orbit (LEO) constellation.

“On February 27, 2023, Globalstar, Inc. (the “Company”) and its partner (the “Partner”) agreed to amend its previously disclosed Partnership Agreements to provide for, among other things, the Partner’s prepayment of $252 million to the Company (the “Prepayment”),” the SEC filing states.

“The Company plans to use the proceeds of the Prepayment to pay amounts currently due and payable, and future amounts due, under its previously disclosed Satellite Procurement Agreement with Macdonald, Dettwiler and Associates Corporation, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of these satellites,” it reads.

Constellation replenishment

Globalstar had opted for Macdonald, Dettwiler and Associates Corporation, as well as Rocket Lab earlier in February 2022. The contract was worth $327m and would see the firms supply an initial 17 satellites for launch by the end of 2025.

It included an option for up to nine additional satellites, costing $11.4m each.

The Apple prepayment comes after the iPad maker already agreed to reimburse Globalstar for 95 percent of the constellation.

But Apple had previously required Globalstar first to raise third-party financing to fund the manufacturing contract.

Amid challenging economic conditions, the Apple ‘prepayment’ removes this financing requirement and helps Globalstar replenish its satellite fleet.

It is understood that Globalstar is allocating 85 percent of its capacity on its next-generation constellation to Apple.